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By the numbers, Clifford Chance offers a powerful vision of the legal profession’s globalized future. The world’s largest law firm, with almost 3,400 lawyers straddling the globe from Barcelona to Bangkok, it is also one of the busiest, ranking second by deal value in Thomson Financial’s most recent survey of law firms handling global mergers and acquisitions. Its gross revenue totaled almost $1.5 billion last year. But a string of high-profile departures suggest the London-based firm’s global vision is having trouble gaining adherents, particularly in the United States, where the firm first expanded in 1999 with its blockbuster merger with New York’s Rogers & Wells. “Some people like a very large organization that is global and focused on international finance,” says Kenneth Gallo, Clifford Chance’s former head of U.S. litigation. “My work is very U.S.-focused. It’s just more comfortable for me to be at a U.S.-based firm.” On Jan. 8, Gallo, who specializes in antitrust, informed his partners at Clifford Chance he would be leaving to join the D.C. office of New York’s Paul, Weiss, Rifkind, Wharton & Garrison. His departure followed by less than two months that of intellectual property group head Leora Ben-Ami, who left with two other partners to join New York’s Kaye Scholer at the end of November. The same month, two other IP partners, Eric Lobenfeld and Ira Schaefer, left to join the New York office of Hogan & Hartson. They were joined earlier this month by eight additional Clifford Chance lawyers. In October, antitrust group head Steven Newborn left with three other partners to join the D.C. office of New York-based Weil, Gotshal & Manges. Newborn and fellow antitrust partner Kevin Arquit had been the two highest-paid partners at Clifford Chance. Arquit left the firm to join New York’s Simpson Thacher & Bartlett in December 2002. John Carroll, Clifford Chance’s U.S. managing partner, says the firm was experiencing “growing pains” as it expanded in the American market, and pointed out that most of the departing partners were former Rogers & Wells partners. “Surprisingly few people left at the time of the merger,” says Carroll. “I think a number of them wanted to see what would happen, to see whether they or the firm would evolve in a way that would fit for them. It was probably inevitable that some would come to this decision.” Arquit agreed that the current exodus had long roots. “It seems to me that this is still the shakeout from the initial merger,” he says. “The merger fit for some; it didn’t fit for others.” Aside from being Rogers & Wells veterans, most of the departing partners have been litigators, and Gallo pointed out that lawyers whose professional worlds are generally limited to a handful of major federal district courts likely find less advantage in Clifford Chance’s global reach. For lawyers with large international transactional practices, Gallo says, “Clifford Chance is probably the best platform anywhere.” But the enormous size of that platform has been an issue for many of the departing lawyers. Though most have gone to firms also considered large, those firms are often less than a third or quarter the size of Clifford Chance. For instance, Paul Weiss, one of the largest firms in New York, has around 100 partners. Clifford Chance has almost five times as many. Newborn says the number of conflicts engendered by Clifford Chance’s size was the main reason for his leaving. Ben-Ami says she wanted to practice at a smaller firm more focused on her area of expertise. American lawyers are also still getting used to Clifford Chance, says Arquit, the newness — and Britishness — of which distinguishes it from U.S. firms such as Shearman & Sterling and Cleary, Gottlieb, Steen & Hamilton, which also claim global reach but have deep roots in New York. ‘MAGIC CIRCLE’ FIRMS As well as being much larger than their American counterparts, most of the law firms of the British “Magic Circle” — which includes Linklaters; Allen & Overy; Freshfields Bruckhaus Deringer; and Slaughter & May along with Clifford Chance — are far more corporate in structure, giving a much greater role in firm management to nonlawyer professionals. Major British firms also largely embrace lock-step partner compensation schemes in which partners are paid according to seniority. In the United States, partners are more likely to be paid according to business origination. Arquit and Newborn had been the highest-paid partners at Clifford Chance and the only ones outside the lock-step system. The departed partners all said money was not a major factor in their leaving, but, in order to boost lateral recruitment, Clifford Chance has discussed relaxing its lock-step partner compensation system in order to pay top American partners beyond the highest rung of the lock-step in London. In October, shortly after Newborn’s departure, the firm completed a partner compensation review and voted to retain lock-step overall but permit the awarding of extra points to certain U.S. partners. A slight majority of the firm’s London partners opposed that step as well. Legal recruiters say the firm needed to do something to reverse the tide of high-profile departures, which they say had already dampened interest in the firm among lateral partners. “It’s going to be tough for them now,” says one legal search executive who asked to remain unnamed. “For partners, they’re going to think twice before signing on to a firm where there’s been a string of departures, particularly significant departures.” Another recruiter, who also asked to remain unnamed, was even more blunt. “Recruiters are going to jump on them,” she says. “They’re going to be a target.” The recruiter noted that Clifford Chance’s partner departures followed an earlier tough period the firm weathered after a memo detailing associates’ complaints about life at the firm was leaked to the press. STRONG MODEL But Carroll downplayed the impact of the recent departures, stressing that a global firm like Clifford Chance would attract some as it repelled others. “In any large institution, there’ll always be some moving in and moving out,” he says. The departing partners all praised Clifford Chance as a strong firm offering a strong practice model. Clifford Chances’ size and global presence, says Arquit, would eventually be viewed as assets by other lawyers and he predicted the firm would gain strength as it attracted new partners who specifically sought to join a large, international firm. But some lawyers would always feel more comfortable at someplace other than the world’s largest law firm, he says. “Some very bright, very driven people choose to practice law in five-person or one-person firms,” he said. “It depends on who you are.” Anthony Lin is a reporter at the New York Law Journal, an American Lawyer Media newspaper, where this article first appeared.

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